The freight and logistics market in Latin America plays a crucial role in the commercial landscape of the continent, facilitating the movement of goods and services across a range of industries. Last year, the market reached a major milestone, achieving a value of USD 1.5 billion. The South American freight and logistics is predicted to undergo a strong growth trajectory, with an estimated compound annual growth rate of 7.5% projected between 2024 and 2032. In the next eight years, industry experts anticipate the South American logistics market will escalate to a value of USD 2.88 billion, underscoring its essential role in the regional economy.
In today’s blog we will take you through some of the key features of the freight and logistics market of Latin America and discuss how independent freight forwarders operating in the continent can expand their operations.
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The outlook of the freight and logistics market in Latin America
E-commerce and Infrastructure Investments Driving the Freight Transport Market in Latin America
The logistics and freight transport market in Latin America is experiencing rapid development, driven by significant investments in infrastructure and the burgeoning e-commerce sector. The rapid growth of the e-commerce sector in South America is a major driver for the increased demand for transportation services. In 2023, the region’s e-commerce sector generated revenues of USD 58.38 billion, up from USD 51.79 billion in 2022. Projections indicate a compound annual growth rate (CAGR) of 13.50% from 2023 to 2027, with revenues expected to reach USD 96.87 billion by 2027. Additionally, the user base is anticipated to expand, with estimates predicting it will reach 244.1 million by 2025. In 2022, the user penetration rate stood at 54.0%, projected to rise to 58.7% by 2025.
Brazil’s Ambitious Infrastructure Goals
Brazil is at the forefront of this transformation, setting an ambitious target to attract around BRL 180 billion (USD 34.03 billion) in private investments for new rail and highway projects from 2024 to 2026. This initiative is part of Brazil’s broader strategy to modernize and expand its road freight infrastructure required enhancing long-haul trucking capabilities. An important development in this regard is the Inter-American Development Bank (IDB) approving a USD 480 million loan in 2023 for the State of São Paulo Highway Investment Program. This program aims to bolster the state’s production chains, improve production capacity, and foster regional integration. Additionally, Brazil is trying to secure USD 62 billion in highway investments by 2026, reflecting its commitment to infrastructural development.
Efficient Warehousing
Efficient warehousing and distribution networks are pivotal to the success of the logistics market, and Latin America has seen substantial investments in this area. State-of-the-art warehouses equipped with advanced technologies are transforming inventory management and order fulfillment processes across the region. These developments play a crucial role in streamlining supply chains, reducing lead times, and ensuring timely deliveries.
The ongoing investments in state-of-the-art warehouses and distribution networks across Latin America represent a significant stride towards enhancing the region’s logistics capabilities. These advancements not only facilitate smoother operations but also reinforce Latin America’s position as a key player in the global logistics landscape.
Argentina’s Enhanced Logistics Capabilities
Argentina is also making strides in improving its logistics capabilities. In September 2023, DHL Express launched new freighter flights between Miami and Buenos Aires to enhance delivery efficiency. These flights, managed by DHL Aero Expreso in Panama, utilize a B767-300 freighter with a 52-ton capacity. Operating six times weekly, the service routes from Miami International Airport (MIA) to Buenos Aires (EZE) via Santiago, Chile (SCL), and back. This initiative aims to expedite customs clearance in Argentina by 10% on the same day as arrival and increase same-day deliveries by 50%.
Technological integration
The logistics landscape in Latin America is undergoing a profound transformation through the integration of technology. From real-time tracking and route optimization to the application of Artificial Intelligence (AI) in predictive analytics, technology is significantly enhancing the efficiency and transparency of logistics operations. This digital transformation is not only boosting overall logistics performance but also catalyzing innovation in service offerings.
How small and mid sized freight forwarding companies in Latin America can increase their profitability
These top multinational players have an ever-tightening grip on the freight and logistics market in South America and every year they keep acquiring a large market year. Thanks to their international presence they bag the biggest contracts and obtain the best rates from the carriers. The small and mid-sized logistics companies on the other hand are not in a position to bid for the highest contracts and often find it hard to get lucrative projects or reliable international partners.
How joining the best freight forwarders networks can help forwarders in Latin America to get new projects
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Receive sales leads from over 250 partners
All Cooperative members are required to contribute a share of their shipments to fellow members, facilitating the exchange of new projects and sales leads throughout the entire network. Despite this obligation, members retain the flexibility to continue working with their existing logistics partners outside of the network. Moreover, every year the network organizes an in-person meeting of freight forwarders where members sit face-to-face with their network partners to hash out the details of future collaborative projects.
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Become a digital freight forwarder
The Coop empowers its members to function as digital freight forwarders through a suite of free online tools. It is the first logistics network to launch a member-exclusive online freight quote management platform- FreightViewer. The Coop’s Freight Viewer offers a digital infrastructure enabling members to generate quotes within seconds. In essence, this program positions network agents to stay one step ahead of their competitors.